I feel like this needs to be incorporated into an episode of Silicon Valley.
The bit about not actually having a real product in production reminded me of a recent episode of the show where it was mentioned that sometimes it is better to not have a real product and revenue because then valuations can be blown way out of proportion in the frenzy without any real revenue benchmarks to base them on.
I believe that derives directly from what people like Fred Wilson or Mike Arrington have been saying:
"As I was reading Josh Kopelman‘s excellent post on the seed boom and Series A bust, I got thinking of some words of wisdom Mike Arrington once shared with me. He said “numbers always ruin a good story.”
What Mike meant by this is you can raise a seed (or Series A) on a story. But at some point, you will have numbers; users, user growth, revenues, and revenue growth. You will also have a burn rate. And those numbers will become the thing you are judged on and your nice story will be “ruined” by the numbers."
Yeah, as usual, when I watched that episode, I'm turning to my wife and muttering "This is true." The writers may be story-driven, but it seems like Bad Money was introduced just to have an outsider who was in-the-know to be able to draw light on the VC machinery.
There is a good reason not to have a product: if you have a product, the smart money will sit back and watch what the product does. But, if you need money to complete a product, the investor knows what the funding is for and has no option to "see what happens."
The bit about not actually having a real product in production reminded me of a recent episode of the show where it was mentioned that sometimes it is better to not have a real product and revenue because then valuations can be blown way out of proportion in the frenzy without any real revenue benchmarks to base them on.